Asia stocks dazzle, but shadows emerging

Recent stock market gains may be dazzling for investors, but some shadows seem to be emerging.

While attention in the last few days has been fixed on the record high for the Dow industrials, other markets have also performed well. Japan’s Nikkei Stock Average
, for example, is now back at 12,000, a level not seen since September 2008.

However, there are signs that Asia investor interest in stock markets is low.

The Yonhap news agency reported that turnover in Korea’s stock market fell to a six-year low in February. Korean stocks, admittedly, have lagged the rest of Asia since the start of the year.

But it’s not just Korea that’s seeing a lack of investor interest. Andrew Sullivan, head of sales trading at Kim Eng Securities, said that stock-trading volumes in Hong Kong are around half what they were the last time the Hang Seng Index
was at its current level.

“Stocks are high, but volumes are light, so there’s not a feeling of general euphoria,” he said.

Light volume can create its own problems.

“Marginal money is probably going into equities … but I think that people are worried about liquidity,” said Sullivan, adding that liquidity concerns help explain why exchange-traded funds and tracker-funds are so popular.

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